This paper considers the ways in which pricing policies will affect location choice in both monopolistic and duopolistic markets. It is shown that the monopolist's optimal location depends crucially on the shapes of demand and delivery cost functions and the pricing policy applied. The median location is unlikely to be chosen. With spatial competition, pricing strategies also affect location choice. There will be greater production concentration under f.o.b. or uniform delivered pricing than under optimal discriminatory pricing. For certain consumer distributions, Hotelling-type concentration is to be expected whereas collusion will lead to some dispersion of production.
Relation:
Regional Science and Urban Economics 16(3), pp.329-351
